Councils unwilling to meet wage costs

Many councils are unwilling to adjust their contracts to the reality of the National Living Wage (NLW), according to National Contractors' Forum (NCF) chairman Phil Jones.

Sid Sullivan - image: Horticulture Week
Sid Sullivan - image: Horticulture Week

The NLW became law on 1 April, requiring all employers to pay workers aged 25 or over at least £7.20 per hour - 50p higher than the previous minimum wage for those aged 21 or over.

The NCF and BALI wrote to government ministers earlier this year outlining the burden of the NLW for some in the local authority grounds maintenance sector, and calling for an indication that the NLW would be funded over an interim period until contractors could budget for it.

But a personal letter back from chancellor George Osborne put paid to that notion, with Osborne saying the NLW was the industry's responsibility and that businesses had received other benefits in the form of improvements to corporate tax rates.

Jones said some councils - usually Conservative-run - have refused to help pay for the increase, saying it is not their responsibility.

Parks consultant Dr Sid Sullivan said it is "not unfair" to expect contractors to absorb costs such as the NLW, as they are expected to have included such costs in their bid price.

"However, if the client claims a collaborative contracting partnership something has to give," Sullivan said.

"Current contract prices are very competitive and therefore the contractor's costs and margins are pretty much fixed. It's in no one's interest for a contractor to default or to reduce landscape standards further to fund this expense; nor to be forced to end a contract prematurely. If that happens it's a failure of both client and contractor."

Sullivan said landscape standards across many local parks are the lowest he has ever seen.

"It cannot be allowed to be the default position without doing irreparable harm to parks, their environmental credentials and public health. The question is, how far are contractors able to further reduce their costs without reducing staff or environmental levels or generate further income - by monetising parks and their use?

"Councils cannot outsource their responsibility to maintain their environmental health assets - parks to you and me - and blame contractors when standards fall because of price pressures."

Jones, who is also managing director of ISS Facility Services Landscaping, agrees contractors should take account of such risks when they tender. But the letter he and BALI chief executive Wayne Grills wrote to the government warned that if contractors could not pass the additional cost burden on to their customers their local authority contracts would become financially non-viable. Contractors would "regrettably" default on contracts and some would go out of business.

The letter asked the government to recognise that these increased costs cannot be funded by the contractor and should therefore be treated as a 'pass through' cost, with the local authority picking up the cost in full. It called for an allowance to be made in each council's annual settlement to fund this increase.

While they were turned down, both Jones and Grills did win an audience with the Low Pay Commission, which advises the government on its NLW policy. The commission has agreed to consult with the industry on future NLW increases, which is "progress", Jones said. The commission will report by October 2016 for the rate in April 2017.

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus

Read These Next

IoG Saltex 2016 - show preview

IoG Saltex 2016 - show preview

This year's Saltex will be looking to build on the success of last year by packing in a multitude of exhibitors and sessions over the two days, Sally Drury reports.

According To Dunnett ... Horticulture needed to 'colour in' green infrastructure

According To Dunnett ... Horticulture needed to 'colour in' green infrastructure

It's now around one year since work started on Sheffield's groundbreaking "Grey to Green" scheme, one of the largest urban green infrastructure projects in the UK.

Tree lifting, moving  and planting

Tree lifting, moving and planting

Successful relocations can see even big trees flourish while costing less than buying new stock, says Sally Drury.

Follow us on:
  • Facebook
  • LinkedIn
  • Twitter
  • Google +
Horticulture Jobs
More Horticulture Jobs

Contracts & Tenders

Sally Drury on professional gardening

Sally Drury

A monthly checklist of things to do and watch out for to keep your garden looking its best.